It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Rigel Pharmaceuticals Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Executive VP & Chief Commercial Officer Eldon Mayer bought US$326k worth of shares at a price of US$3.28 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$1.92). Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
Over the last year, we can see that insiders have bought 364k shares worth US$1.0m. In the last twelve months Rigel Pharmaceuticals insiders were buying shares, but not selling. Their average price was about US$2.79. This is nice to see since it implies that insiders might see value around current prices. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders at Rigel Pharmaceuticals Have Bought Stock Recently
Over the last quarter, Rigel Pharmaceuticals insiders have spent a meaningful amount on shares. Specifically, Executive VP & CFO Dean Schorno bought US$107k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our information indicates that Rigel Pharmaceuticals insiders own about US$938k worth of shares. We might be missing something but that seems like very low insider ownership.
What Might The Insider Transactions At Rigel Pharmaceuticals Tell Us?
It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Rigel Pharmaceuticals stock. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: Rigel Pharmaceuticals may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.